Recent Ontario pension reforms have created additional disclosure statement obligations that administrators should consider when they work with their third-party service providers to create annual, termination and death benefit statements.

Regulations that came into force in May 2011 require that annual member statements include the transfer ratio of the pension plan as calculated in the most recent two valuations reports and an explanation of what the transfer ratio means. Basically, the transfer ratio describes the funded status of the plan on a solvency basis. For example, if the transfer ratio is 0.85, then the plan is 85% funded. The Financial Services Commission of Ontario has indicated to some plan administrators that this requirement will not be applied to annual statements covering periods ending on or before December 31, 2011.

The reforms also indicate that retired members will be entitled to receive periodic benefit statements. The Ontario government has not yet released details specifying the frequency and content of what must be communicated to retirees.

Ontario pension law has always permitted active members, deferred vested members and retired members of a pension plan to establish an “advisory committee.” They were toothless committees. Ontario pension reforms has changed the rules regarding the membership and administrative burden of advisory committees. Advisory committees will continue to have no real power to direct the administration of pension plans.

Retired members have always been permitted to participate in advisory committees; however the pension reforms have guaranteed retired member participation in these committees.

The reforms also empower advisory committees to (i) charge their costs to pension funds; (ii) force pension plan administrators to meet with them; and (iii) force administrators to provide the committee with wide array of information. The regulations detailing these new financial and documentary powers have not been released by the Ontario government.

We will keep an eye out for the creation of broad rights that may give advisory committees the right to ask for an employer’s sensitive financial or legal documents under the guise of monitoring the pension plan.

Effective July 1, 2012, the Ontario Superintendent of Financial Services’ powers to order the wind-up of a pension plan has been expanded to include instances where the plan has no active members, or the plan members are no longer accruing pension benefits.

A wind-up order will not be automatic; the Superintendent must take action for a wind-up order to be effective.

It is possible that the Superintendent will not exercise his authority to order a wind-up unless he believes that the security of the members’ benefits is in jeopardy. This will be a sensitive issue for pension plan sponsors who have ceased accruals in defined benefit pension plans, who do not wish to carry out a wind-up in the current environment where solvency deficiencies are at an all-time high.

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